Operator: Thank you. Our next question comes from Simeon Siegel with BMO Capital Markets. Your line is open.
Simeon Siegel: Thanks everyone. Morning. I hope you and your family had a nice Thanksgiving. So can you — staying aside the $65 million, could you just speak to any of the expected composition of the 4Q gross margin, so within guidance? So just thinking through parsing out the other levers. And then, Martin, so you said AUR was healthy. Any way to, I guess, quantify or just give us context what that means? And I assume the implication is that UPTs were down. So if AUR is healthy, UPT is pressured, what does that tell you about using promotions? I guess, like it sounds like people are willing to pay what you said. They’re just buying fewer units? Or do you think it might be reflecting the idea that maybe they just overpurchased over the last couple of years, and they’re still working through the excess and then just need fewer things? So I would love your view on that.
Martin Waters: TJ, do you want to take the first part of the question?
TJ Johnson: Yes, I think from an AUR perspective, Simeon, we still feel very good about the AUR positioning of the business. And really what we’re talking about is from a ticket perspective, we feel very good about where we are. What we’re really talking about is how do we use that strength in ticket and strengthen margin profile of the business, and if the net AUR needs to change a little bit here in the fourth quarter, to continue to get the kind of conversion that we want and the kind of basket growth that we would like to see and traffic growth we’d like to see, we want to use that strength. Again, doesn’t necessarily mean that we have to be at this level of promotion for all four quarters of the year. That’s not what we’re talking about.
But clearly, in the fourth quarter, when it’s our Super Bowl, we need to do everything we can do to make sure we’re getting our fair share. In terms of your question around overpurchasing or overproducing in the past, I’m not necessarily sure we’re thinking about it that way. I think we’re thinking about it as there is a very competitive environment across the mall. There are others in our view, that are in much different inventory position than we are and are more in a liquidation mode. Our position of strength from an inventory perspective is not a liquidation. It’s about how do we make sure that we’re getting profitable sales in a difficult environment.
Martin Waters: Yes. I’ll just piggyback that a little bit, TJ. I think you’ve covered it. But units per transaction are down. Basket size is down. Like TJ said, I don’t think we were overperforming in the past. But I do recognize that the customer has different categories to choose from. All of the dollars that are available should come out and say, I’m going to point those at the intimate apparel category. There’s just dollars in the wallet. And other categories have come back stronger than they were in previous years, and that’s a reflection of times changing being more open now than we were during COVID time. So what I go to is looking at our performance relative to the market in which we compete. And the market’s down. We’re down and the market’s down.
It will come back. I think the most important thing is to make sure that we’re super competitive, and that we’re giving her the best possible offer that we can in terms of newness and in terms of value. So that’s where we’re focused right now, control what we can control.
